Google Settlement Is Rejected

By Andrew Albanese & Jim Milliot
|

Mar 22, 2011

In a stunning setback, Judge Denny Chin today rejected the Google Book Settlement, some 13 months after its final fairness hearing. “In the end, I conclude that the [Settlement Agreement] is not fair, adequate, and reasonable.” Chin set a date of April 25th for a status conference, and suggested his concerns with the agreement could be ameliorated with one simple change. “As the United States and other objectors have noted, many of the concerns raised in the objections would be ameliorated if the ASA were converted from an opt-out settlement to an opt-in settlement. I urge the parties to consider revising the ASA accordingly."

In his decision, Chin recognized the value of digitization, but sided firmly with the settlement's objectors and critics that the deal gave Google an unfair advantage. ”While the digitization of books and the creation of a universal digital library would benefit many, the ASA would simply go too far.... Indeed, the ASA would give Google a significant advantage over competitors, rewarding it for engaging in wholesale copying of copyrighted works without permission, while releasing claims well beyond those presented in the case."

In a statement, publishers said they would seek revive the settlement as suggested by judge Chin. "Publishers have been making substantial investments to enable and enhance online access to content in accordance with copyright laws and we will continue to do so regardless of the outcome of the litigation," said Macmillan CEO John Sargent, one of the settlement's architects. "Publishers are prepared to modify the Settlement Agreement to gain approval. We plan to work together with Google, the Authors Guild and others to overcome the objections raised by the Court and promote the fundamental principle behind our lawsuit, that copyrighted content cannot be used without the permission of the owner, or outside the law.”

Among Chin’s numerous concerns with the ASA is what he calls the second part of the agreement, the section that “would transfer to Google certain rights in exchange for future and ongoing arrangements, including the sharing of future proceeds, and it would release Google (and others) from liability for certain future acts.” That provision, Chin, said goes too far. Chin echoes many of the objectors’ concerns, stating that “creating a mechanism for exploiting unclaimed works is more suited for Congress than this Court.” And although he acknowledged that laws introduced by congress to address the orphan works question were never passed, Chin said the fact that the ASA raises international issues is another reason to have the Congress act.

Chin also said the ASA went beyond the pleadings in granting Google permission to sell full access to copyrighted works that it otherwise would have no right to exploit. The ASA would give Google this authority “even though Google engaged in wholesale, blatant copying, without first obtaining copyright permission.”

Chin was also troubled by the high number of people –6,800—who opted out of the agreement. He noted that academic authors in particular were troubled by the agreement and said that while in many class action lawsuits many members of the class are never heard from, in this case members who are not heard from are giving a license to Google for future use of their works. Chin backed anti-trust objections, noting that the ASA “would give Google a de facto monopoly over unclaimed works.”

The Authors Guild said it hoped the different parties good still find common ground.. “Although this Alexandria of out-of-print books appears lost at the moment,” said Authors Guild president Scott Turow, "we'll be studying Judge Chin's decision and plan on talking to the publishers and Google with the hope that we can arrive at a settlement within the court’s parameters that makes sense for all parties.”

“Regardless of the outcome of our discussions with publishers and Google, opening up far greater access to out-of-print books through new technologies that create new markets is an idea whose time has come,” said Turow. “Readers want access to these unavailable works, and authors need every market they can get. There has to be a way to make this happen. It’s a top priority for the Authors Guild.”

New York Law School professor James Grimmelmann, a close follower of the case, told PW the numerous filings of objectors clearly made a significant impact on Judge Chin. "His opinion recites many of the objections," Grimmelmann noted. "He was clearly swayed by what he saw as a broad base of opposition to the settlement from a diverse group of class members. He called out the forward-looking settlement issue in particular, but he also cites copyright and international and other issues, not just legally, but in terms of class opposition.

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